Electricity Tax Exemptions for Agricultural Commodity Processors

With the vast tracts of fertile lands spread across the United States, it is no surprise that landowners have ventured into various classes of farming operations.

In fact, to date, the United States is regarded as a giant in international food exportation. Products like fruits and vegetables, wheat and grain, as well as meat and dairy foodstuffs, have reached various places all over the world. Indeed, the agricultural sector forms a large part of the states’ annual revenues.

However, a heavy burden falls on the shoulders of these farm owners because their operations, such as planting and breeding, weaning and harvesting, processing, as well as packaging and transportation, use up a lot of energy on a daily basis. The enumeration is exclusive of lighting and electric usage of other farm equipment and machinery. Consequently, not only does this matter on electricity and energy consumption take its toll on their profits, but it also puts too much pressure on them owing to their respective state’s environment, natural resources, and energy conservation laws.

So, to encourage planters and growers to produce more, but without compromising their environmental laws, many states have devised incentives to encourage and promote electrical energy efficiency on farms in the US. One type of benefits given to farmers and growers is focused on tax exemptions, credits, deductions, and exclusions for the practice of efficient energy use in farming operations.

Let us take the state of Florida, for example, which offers Electricity Sales Tax Exemption for Manufacturing under the provisions of Section 212.08 of the Florida Statutes. The incentive includes exemption from sales tax of expenses incurred for payment of electricity that is directly and exclusively utilized by equipment and machinery involved in the manufacturing, processing, compounding, and/or producing tangible property for sale, among others.

To be eligible for the exemption though, the taxpayer must comply with the following minimum requirements:

The taxpayer is a hundred percent exempt from the aforementioned sales tax if at least seventy-five percent of the electricity is used in the agricultural or farm operations.

The taxpayer is fifty percent exempt from the aforementioned sales tax if at least fifty to seventy-five percent of the electricity is used in the agricultural or farm operations.

The taxpayer is no longer exempt if only less than fifty percent of the electricity is used in the agricultural or farm operations.

Florida is only one among at least 20 states that offer electricity tax exemptions for agricultural commodity processors. But, a comparison of the varying state tax exemption laws would reveal that they are more or less similar, with a two-fold end view in mind. That is, to encourage both small-scale and large-scale farmers, food manufacturers and processors, and livestock as well as orchard growers, to continue supplying foodstuffs for the people, at the same time contributing to the state’s income, but without hurting the environment.

The National Utility Consulting highly recognizes and commends this collective state endeavor. So, for our part, we also wish to extend our help to agricultural commodity processors, specifically to livestock and orchard growers and processors, by showing you how you can cut back more on your electricity costs. Contact us anytime for a free extensive consultation with our specialists.